Business Directories

Grounded by lack of vision...

Manama, January 14, 2013

Arthur Macdonald/ Gulf Daily News

I have long been a big fan of Gulf Air, not least because it was the airline that brought me out to the Middle East 10 years ago for my first job in the region. Perhaps surprisingly that flight was taking me to a job in Dubai on a flight via Abu Dhabi.

That is not something that is likely to be repeated in the near future from anyone travelling from the UK.

My big hope for 2013 is that the national carrier can put its past problems behind it and address the serious problem of re-establishing the airline as a major player in the region in the future. But towards the end of last year the signs were not good.

Last month MPs voted to replace the entire Gulf Air board, which had only been in place for a few weeks and cancel the contracts of two consultancy firms recruited by the airline.

The argument seemed to be that neither the new board nor the consultants had sufficient commercial aviation experience.

I could be wrong, but if you have to have aviation experience to sit on the board or examine the efficiency of a commercial operation, just how many representatives who took this decision are experts on aviation or could even explain why aircraft manage to get off the ground.

If you want advice on how to turn round an operation that is losing money hand over fist and has been leaking around $1 million a day for rather a long time then someone who is new or from the outside may be able to give you an insight that has been missing with those in place across the organisation.

But it strikes me that every time someone is appointed to turn round Gulf Air rather a lot of vested interests immediately start telling innovative management that they can’t do this or that, for reasons that have nothing to do with commercial viability.

Perhaps the powers that be in Bahrain could learn something from Japan in trying to make their airline viable.

About three years ago Japan carrier JAL, which had been making Gulf Air’s losses look minimum, was in the process of filing for bankruptcy with debts of more than $25 billion.

The decision was made to bring in a highly successful 80-year-old businessman from a high technology company called Kyocera.

The favoured saviour for the airline, Kazuo Inamori initially declined the challenge and his hesitancy was nothing to do with his age.

The man who founded Kyocera said, “I declined the offer numerous times because I had no clue about airlines. I didn’t even know that JAL had such a huge debt until it went bust.”

Last year the airline re-listed on the stock exchange and went into profit.

He says his biggest challenge was to change JAL’s rigid and bureaucratic corporate culture. Until its privatization in 1987, Japan Airlines was owned by the government for more than three decades.

“Many former government officials used to get golden parachutes into the firm so I am not saying that it was all JAL’s fault,” he added.

“But even then, I was surprised that there was no true leader who could unite all the staff during the crisis.”

Perhaps it is time to realise that the problems are not going to go away in Bahrain without some drastic action.

That action needs to be taken by a leader who has the backing of Bahrain and who has the ability to explain to the workforce that there will have to be drastic cuts in staffing levels because the alternative is closure and no jobs at all.

The bottom line

The trade union leaders at Gulf Air are clearly between a stone and a hard place.

It is not their fault that the airline has been transformed from a carrier run by three nations to just one. It is not their fault that there have been decisions made in the past that have seen loss-making routes added to existing loss-making routes.

I could be wrong about this, but I am unaware of any exorbitant pay claims or industrial action by union members at Gulf Air.

But the bottom line which, trade union leaders have to come to terms with, is that their members are working for a company that is losing money like there is no tomorrow and there is going to be a lot of pain involved in remedying that situation.

Doubtless Gulf Air should have been looking at extensive downsizing the day after Bahrain became sole partner in the venture.

But you can’t re-write history and the airline’s staff will now have to suffer the consequences of decisions not taken in the past.

Gulf Air, I believe, wants to cut 800 jobs in the short term with that number rising to 1,800 in the not too distant future. That is a hard pill to swallow.

My heart goes out to the union leaders at Gulf Air because I am a life-long trade unionist and was highly active in the journalists’ union back home for about quarter of a century.

I used to hold the second highest lay office in my union in Scotland and negotiated pay and conditions deals for both my own newspapers as well as helping out on pay bargaining with smaller newspapers that I did not work for.

Before entering into any negotiations I always went to Companies’ House in Edinburgh to check up on the commercial viability of the business in question. The bottom line is always that if the company is doing well you go in with all guns blazing.

But if it is doing badly the boot is on the other foot and it is the job of a negotiator not just to get the best deal possible but to sell it to the people he represents in their own interests.

Going back to the people you are negotiating on behalf of and recommending a rather poor deal does not make you very popular. But a poor deal is a good deal if it is the best possible deal.

Negotiators who refuse to come to terms with reality are representing no-one. You only have to look at the UK shipbuilding, mining, steel, engineering and newspaper industries to appreciate that. – TradeArabia News Service

This article appeared in the January 14, 2013 edition of our sister publication, the Gulf Daily News.